Do you know the difference between term life insurance and mortgage insurance policies? Many new homeowners consider one but not the other, which can leave families in a lurch with insufficient funds to cover their essential needs.
A mortgage life insurance policy is a form of insurance offering coverage for your remaining mortgage should you die. Unlike a term life insurance policy, which goes to a named beneficiary, mortgage life insurance goes to the lender. This will help your family rest easy knowing that they will not have to worry about making mortgage payments to a bank or similar party.
Because of these key differences, a term life insurance policy simply may not be enough to cover mortgage payments. Moreover, different factors will affect a person’s ability to qualify for each type of policy. Health issues, for example, may prohibit someone from obtaining a sufficient term life insurance policy but will not affect a mortgage insurance policy. On the other hand, actions such as refinancing a mortgage will impact your ability to secure or retain a mortgage insurance policy.
Ultimately, you may need both types of policies once you become a homeowner. As such, it’s important to know the differences between each and consider your needs to ensure that you are adequately covered. Take a quiz to test your knowledge of what term life insurance and mortgage insurance policies cover; what it takes to qualify for each; who stands to receive the payout; and what factors may inhibit your ability to obtain these policies.
This Term Life Insurance Quiz was brought to you by Health I.Q.